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“We took a number of steps in 2009 to ensure that, as profitable growth opportunities emerge in the future, we will be ready to grasp them. In particular, our £150m rights issue reinforced our underwriting capabilities at Lloyd’s and funded the successful acquisition of First State Management Group, a US insurer of commercial property risks.

“In 2010, insurers and reinsurers will be fortunate to experience a repeat of the past year’s low incidence of catastrophe losses. Rates for catastrophe-exposed business have fallen but remain relatively high.

“In the specialty lines market, mainly comprising professional indemnity business, we expect rates to rise modestly in 2010, driven by recession-related losses in some areas, low investment income and inflationary threats.

“Our diverse book of business in this class and strong track record in cycle management enabled us to navigate a challenging market in 2009 and we are well placed to benefit from any rate rises that occur.”